FOR IMMEDIATE RELEASE
Washington, DC, April 17, 2015 — “The virtual currency Bitcoin is a mere speculative bubble, or it’s a force set to transform the financial world, depending on whom one asks,” says Michael Vidikan, president of the research organization Future in Focus. “Bitcoin is clearly in its early stages and its future is still unclear.”
How does Bitcoin work? Created in 2009 as a decentralized, peer-to-peer currency system, the anonymous programmer of the currency designed it so that no banks or governments were involved in transactions, which could be anonymous.
Will We All Be Using Bitcoin in the Future?
Vidikan believes there are three potential scenarios for Bitcoin:
- The status quo — meaning its current marginal existence continues.
- Outright suppression by governments.
- Success as a mainstream currency.
SCENARIO 1: Bitcoin on the Margins
Bitcoin continues on its present trajectory. Its value fluctuates, though perhaps with continued overall rise. Adoption remains peripheral, largely limited to cryptocurrency enthusiasts, techies, and those with a strong need for one of the features of Bitcoin, such as untraceability.
Governments mostly keep their hands off, though some place limits on cryptocurrencies or ban them altogether. Bitcoin faces competition from other virtual currencies, such as Zerocoin, Namecoin, and Litecoin.
SCENARIO 2: Bitcoin Is Suppressed
A few major governments with economic leverage on global finance and multinational corporations turn against Bitcoin, provoked by its facilitation of illegal activities, from pornography to terrorism.
They succeed in widespread bans, so that the currency has to be used quietly in most places, and interfaces with conventional markets and banking are hard to find. Bitcoin still exists, but mostly as a covert and somewhat illicit technology, akin to pirated file-sharing.
SCENARIO 3: Bitcoin Triumphs
Bitcoin surges in use, propelled by a combination of widespread acceptance and use in e-commerce and payment systems. It is already finding increasing adoption by consumers in economically unsteady countries that lack stable, readily convertible currencies or widespread bank accounts and credit card networks — and in this scenario, that helps propel Bitcoin toward the mainstream.
This scenario would become even more plausible if a large-scale financial discontinuity is perceived to be likely in a major market, as Bitcoin might be seen as an alternative to national currencies.
Will Bitcoin be available at ATMs? Possibly. And if so, consider these business implications:
- In the immediate future, being involved with Bitcoin will mostly buy a company publicity and street cred with certain kinds of consumers, principally techies and alternative investors.
- The currency will be potentially subject to substantial volatility for years to come, and it is not yet clear what will provide it real stability.
- Bitcoin faces restrictions that vary by jurisdiction, a circumstance that is likely to persist and could complicate efforts to use it for commercial purposes.
- Bitcoin’s peer-to-peer, no-trust-required nature may make it useful in emerging markets that lack credit card and banking infrastructure.
- There may be a role for Bitcoin in transactions in which consumers want a very high degree of privacy, such as for products considered embarrassing or socially unacceptable.
“Because outcomes are uncertain, it is too early to say whether Bitcoin is important in the future of business. The drivers and indicators that accompany each of the three scenarios will help to suggest whether this is changing,” says Vidikan.
About Michael Vidikan
Michael Vidikan knows that small-business owners need a crystal ball. Not a magical orb — but insight about the trends that are shaping their industry, the buying habits of consumers, and the financial future of the world. That’s why he created Future in Focus magazine, which goes live on May 1, 2015. This month, he released his first Futurist column on BeInkandescent.com. Stay tuned for more.